Royalty Pharma sweetened its original offer to $7.3 billion in its new bid for Elan.

The battle for Elan Pharmaceuticals heated up with Royalty Pharma announcing a definitive offer to buy the drugmaker for up to $7.3 billion after its shareholders unanimously approved a $1 billion buyback of shares on Friday April 12. The deal was in jeopardy, however, after Elan completed the buyback on Thursday, April 18.

Royalty Pharma derives its revenue by buying an interest in royalty streams, and to date has purchased interests in several high-profile drugs, such as Gilead’s Sciences’ HIV drugs Truvada, Emtriva, and Atripla, and Abbott’s arthritis drug Humira, among others.

Royalty Pharma’s interest in Elan was piqued after Biogen Idec paid $3.25 billion in February to acquire Elan’s 50 percent interest in the multiple sclerosis drug Tysabri, leaving the Irish drugmaker with basically no pipeline and revenues coming mainly from Tysabri royalties.

An initial unsolicited offer to buy Elan for approximately $6.5 billion in the beginning of March was rejected, and Elan management went ahead with plans to distribute to shareholders $1 billion of the money it received from Biogen with the intention of pursuing deals with the rest of the cash.

Royalty Pharma sweetened its original offer to $7.3 billion in its new bid for Elan. The new offer was based on what Elan pays per outstanding share and ADS of Elan in its Dutch Auction to redeem shares, ranging from $11.25 per share to $13 per share. It also made clear that if Elan didn’t confirm its net cash position, the cash portion of the offer would be reduced by $1.00 per share, which would be offered as a contingent value right.

Three days later, however, shareholders signaled their intention to remain an independent company. Elan announced that it had completed the buyback at the bottom of its target range of $11.25 to $13.00 a share. Most of the tendered shares, 92.3 percent, were from Johnson & Johnson, which cut its stake in Elan to 4.9 percent from 18 percent.

What happens now is uncertain. Analysts polled by Reuters were divided on whether or not Royalty Pharma would come back with a better offer. Elan told Reuters that only 4 percent of shares were tendered near the top end of range. It remains to be seen if shareholders are holding back, waiting for a higher offer from Royalty Pharma.